Much has changed in the past few years, with some of the most visible changes taking place in the well trafficked malls dotted throughout the country. As recently detailed by Stephanie Skrbin of a national retail publication, many of the familiar anchor stores in our nations malls have been vacated and are being replaced with unorthodox ones. Well known mall staples have also changed their plans, focusing on smaller, more economic spaces. The results could be a much different trip to the mall.
Previously popular anchors such as Macy’s have begun to give way to new ones. They include such disparate tenants as Target, Costco, athletic centers and grocery stores. Perhaps not surprisingly, the well traveled corridors of a mall are just as good for business as the typical lots these tenants fill. Target, for instance, has 106 out of 1,700 nationwide stores located in malls which have proven to be just as successful. There are slight differences in operation, as mall stores are usually busier on the weekends and have more purchases but for less money.
Gyms can benefit malls because their customers have already paid their membership dues. Thus, they ensure money is not siphoned away from retail and members can leave, wallets full, proceeding into a nexus of commercial activity. Grocers are also proving to be successful tenants. They benefit from an expanded area of operation while 60% of their shoppers proceed to make further purchases at the mall.
Familiar mall tenants such as Gap and Ann Taylor are also adjusting to the new climate. Gap is reducing its store prototype from 18,000 SF to much smaller range of 8,000- 12,000 SF, while Ann Taylor is reducing its prototype by one-third. These changes are beneficial in the current market because they increase sales per SF and force a reduction in inventory, creating a more streamlined store model.
Through these modifications, malls have been opened up to a variety of tenants which are traditionally net leased. Grocery stores, athletic centers and discount retailers have extensively utilized the net lease structure. Their expansion into well trafficked malls may create new opportunities for investors.
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